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What I read in the article was that many of these people had filed a return, but not a specific document that was required to accompany the return. And that it was difficult to get the institutions to provide the documents they needed to file with the return. So yes, I would call that pretty much out of their control, and I would consider the penalties for failure to include those supporting docs cruel and unusual punishment.
If that's what you read, it's not correct. There are actually two forms that may required to report foreign bank accounts.
1. TDF 90.22-1, or FBAR, for Foreign Bank Account Report. This is NOT part of a tax return, but is filed separately. It is due June 30, and is filed with the Treasury Dept. in Detroit, not an IRS office. It must be RECEIVED by June 30. There are no extensions available, but they will listen to excuses for late filing. At least they don't assess penalties, or ignore the excuses, whichever. The threshold filing requirement is relatively low, foreign account balances of $10,000.

What's irksome about this form is that it's due June 30, before the tax return, for people with extensions. And many people with complicated investments don't get their K-1s until Sept. 15. So we get their tax return info. in September (or Oct., God forbid.) And then we find out there's one or more new foreign financial accounts.

2. IRS Form 8938, which IS part of a tax return, but it's only been required the last two years. The filing requirements are higher, and depend on your filing status and whether you're in or out of the country.

There are no supporting documents required that you need to provide with either. All you need are account numbers and maximum balances for the year. That's it, to my knowledge. For foreign securities accounts, or securities directly owned, it's a little more involved, but if you're doing international investments on your own you should be expected to have the sort of info. that's required.

But the duplicate reporting is definitely overkill.

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